Here’s where single-family houses are desperately needed
An increase in single-family home building is desperately needed in many areas of the US but the National Association of Realtors has identified the ten metros where the demand is highest.
Building permits are running below demand in 80 per cent of the metros surveyed but the largest deficit is in New York where the NAR says 218,541 are needed.
Dallas (132k), San Francisco (127k), Miami (119k), Chicago and Atlanta (94k), Seattle (73k), San Jose, CA (69k), Denver (67k) and San Diego (56k) complete the top ten.
These metros are among those that have demand from buyers, home prices increasing above incomes and fast home sales cycles.
“Inadequate single-family home construction since the Great Recession has had a detrimental impact on the housing market by accelerating price growth and making it very difficult for prospective buyers to find an affordable home – especially young adults,” said NAR chief economist Lawrence Yun. “Without the expected pick-up in building as job gains rose in recent years, new and existing inventory has shrunk, prices have shot up and affordability has eroded despite mortgage rates at or near historic lows.”
Builder confidence has jumped
Builders have reported strong confidence in the market for single-family homes in the latest index from the National Association of Home Builders and Wells Fargo.
The index has jumped 6 points in September to a reading of 65, the highest level in almost a year.
“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” said NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Ill. “The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017.”
Builders continue to be constrained by labor shortages and a lack of lots but remain confident that where these challenges are overcome and they can build more, they will sell.
Economic outlook brighter says Fannie
The outlook for the US economy is brighter in the second half of 2016 compared to weakness in the first 6 months.
Fannie Mae says its expects growth of 2.6 per cent for the second half, accelerating from the lacklustre 1.0 per cent of the first. However, the corporation points to weak business output which could result in lower hiring rates and wage increases.
For the housing market, Fannie’s report highlights new home sales as a “bright spot” and says there is an increase in new homes under construction or not yet started. Chief economist Bob Duncan says that sales of existing homes underperformed in July but were still 2.6 per cent higher than a year earlier.